Volcker Spares No One in Broad Critique

[MichaelB]

I always find Chairman Volker refreshing and wouldn't mind seeing him back at the Fed - or the Treasury.

Former Federal Reserve Chairman Paul Volcker scrapped a prepared speech he had planned to deliver at the Federal Reserve Bank of Chicago on Thursday, and instead delivered a blistering, off-the-cuff critique leveled at nearly every corner of the financial system.

Standing at a lectern with his hands in his pockets, Volcker moved unsparingly from banks to regulators to business schools to the Fed to money-market funds during his luncheon speech.
He praised the new financial overhaul law, but said the system remained at risk because it is subject to future judgments of individual regulators, who he said would be relentlessly lobbied by banks and politicians to soften the rules.

Volcker Spares No One in Broad Critique - Real Time Economics - WSJ

 

[Independent]

This certainly isn't the biggest issue he mentions, but it happens to agree with one of my opinions, so I'll quote it:

12) Money market funds — “Money market funds have encroached so much on the banking market. They are nothing, in my view, but a regulatory arbitrage. The purpose that they serve in handling payments and short term paper is a commercial banking function” but they don’t hold the capital or face the regulation of banks.

To me, it's just one example that I can understand of how regulators didn't want to expand bank regulations to cover shadow banking. I'm encouraged by the comment in the article that he finds the fin reg bill useful. But personally, I think I'll stay way over-weighted in TIPS.

 

[LARS]

I always find Chairman Volker refreshing and wouldn't mind seeing him back at the Fed - or the Treasury.

Nice thought but never going to happen. Unfortunately Volcker has been mainly window dressing for Obama.